【TOP1 Morning】Gold fell below 1830; Dollar rose above 90;

Yesterday Market Review

Gold

Gold slumped more than 4% on Friday, and silver followed with a near 10% plunge as prospects for a smooth transition of power in Washington and a jump in U.S. Treasury yields hammered the precious complex.

The spot gold closed at $1847.76 per ounce; the volatility within the day is $1828.00-$1917.40.

“Gold is having a major fundamental shift for many investors, and they’re starting to abandon their safe haven trade,” said Edward Moya, senior market analyst at OANDA.

“You’re probably going to see that the Treasury market sees some strong flows and that’s taking away some of the appeal from gold.”

Democrat control of the U.S. Senate has raised bets for large stimulus, lifting the benchmark 10-year bond yield to its highest since March.

Since U.S. President Donald Trump has agreed to an orderly transition of power, there’s been some “temporary profit-taking,” said Jeffrey Sica, founder of Circle Squared Alternative Investments.

“Once gold broke below $1,900, some of the momentum traders continued to execute sell orders.”

While gold has generally been seen as a hedge against the inflation that could result from widespread stimulus, especially last year, that has changed as higher bond yields increase the opportunity cost of holding non-interest yielding bullion.

“We’re going to see a lot more of stimulus and that ultimately moved interest rates higher,” said Bart Melek, head of commodity strategies at TD Securities.

Some analysts also said a few investors could have also diverted funds to Bitcoin, which has extended a meteoric rally.

The silver closed at $25.272, the volatility within the day is $24.447-$27.190.

Forex

The dollar pulled back from a one-week high against a basket of major currencies on Friday after a dismal December U.S. payrolls report highlighted the need for further stimulus measures to prop up an economy battered by the coronavirus and its related government lockdown measures.

The U.S. dollar index closed at 90.01; the volatility within the day is 89.62-90.23.

The greenback had been climbing from a nearly three-year low on Thursday and reached a high of 90.132 on Friday ahead of the data, its highest level since Jan. 1, as a rise in U.S. yields helped fuel the unwinding of bearish bets on the currency, with traders taking profits against the euro in particular.

Both the euro and the pound strengthened against the dollar in the wake of the payrolls report. The euro was last down 0.14% to $1.2253 while Sterling was last trading at $1.3588, up 0.18% on the day. 

Crude Oil

Oil prices edged higher on Friday, hovering near 11-month highs hit the previous day, as Saudi Arabia’s pledge to make voluntary cuts to its output continued to buoy the mood in the market though worries over slower fuel demand capped gains.

West Texas Intermediate crude settled at $52.489 volatility within the day is $50.828-$52.552. International benchmark Brent crude closed at $56.036, volatility within the day is $54.315-$56.075.

Both benchmarks are on track for gains of about 5% for this week.

“Oil markets are expected to stay in a bullish tone toward February on the back of Saudi’s surprise promise to cut production,” said Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co.

Earlier this week, Saudi Arabia, the world’s biggest oil exporter, said it would cut output by an additional 1 million barrels per day (bpd) in February and March.

Stocks

Stocks closed at record highs on Friday to end the first trading week of the year as traders weighed the prospects of new fiscal aid as well as disappointing U.S. jobs data.

The Dow Jones Industrial Average ended the day up 56.84 points, or 0.2%, at 31,097.97. The S&P 500 rose 0.6% to 3,824.68, and the Nasdaq Composite popped 1% to 13,201.98. Both the Dow and S&P 500 posted four-day winning streaks.

Coca-Cola rose 2.2% to lead the Dow higher. The consumer discretionary and real estate sectors each rose more than 1%, lifting the S&P 500. The Nasdaq got a boost from Tesla, which popped 7.8%.

TripAdvisor — Shares jumped more than 8% after Deutsche Bank added a short-term buy call to the online travel company, calling it a big player in the “post-vaccine travel recovery.” However, the Wall Street firm reiterated its long-term hold rating on the stock. Shares have rallied more than 20% in January.

For the week, the Dow and S&P 500 each gained more than 1%, while the Nasdaq advanced 2.4%. Those weekly gains come despite the turmoil in Washington, where a riot at the Capitol on Wednesday delayed the procedural congressional confirmation of Biden’s victory.

Stocks started off the new year with a slump on Monday, but the market churned higher as expectations of more government aid increased with Democrats winning two key Senate races in Georgia.

Focus Tonight:

22:40 (GMT+8): ECB President Lagarde Speech;